Flaherty sees recovery, credit risks lurk

03/05/10

By Jennifer Kwan

TORONTO (Reuters) - Canadian Finance Minister Jim Flaherty said on Monday that while the economic recovery is under way, risks still lurk, including global credit issues and high domestic unemployment.

"There's still concerns in credit markets around the world. Witness what we've just been through with ... fiscal crisis in Greece and the fallout that can come from that kind of sovereign crisis," he told reporters in Toronto.

"We have to be cautious. We're on our way to a recovery. There's still significant unemployment in Canada, above what we're used to in Canada. That's a concern. There's still some concerns on the credit side about the full availability of credit as we had before the crisis."

Flaherty, the longest serving finance minister in the Group of Seven nations, said there were also some concerns about assets held by non-Canadian banks.

Asked about Canadian jobs data for April due out this Friday, Flaherty declined to comment. But he noted that employment growth tends to lag in the early stages of a recovery.

"I do expect that over time we'll continue to see some drag on the job numbers, that they will not be as good as the economy overall might indicate. This is not unexpected," he said.

Flaherty also said he hopes that European countries outside of Greece take steps to control their budget deficits to maintain market confidence.